Allpoint Blog

Cash. You’ve heard the putdowns and prophecies. It’s outdated, outmoded and destined for the dustbin of history. Its obituary has been written countless times by several respected economists and executives… plus a familiar character from the Simpsons.

Former U.S. Labor Secretary and economist Robert Reich told CBS News in 2012, “There will be a time – I don’t know when, I can’t give you a date – when physical money is just going to cease to exist.”

Last November, Apple CEO Tim Cook signaled cash’s death knell when he told Trinity College students in Dublin, “Your kids will not know what money is.” Early this year, Deutsche Bank’s new CEO John Cryan asserted, “Cash I think in 10 years’ time probably won’t exist. There is no need for it.”

And of course there’s Apu, the proprietor of the Kwik-E-Mart in Springfield, home town of the Simpsons. During the TV series’ 2011 season, he declared, “We’re a cashless society.”

Myth-busting

But, here’s the reality -- while a Gallup poll in June indicated that 62 percent of Americans foresee the death of cash in their lifetime, cash remains the leading form of payment.

While a fragmented payments marketplace exists that overflows with card and digital payment options, the most recent data from the Federal Reserve System’s Cash Product Office makes clear: Cash continues to be the most frequently used consumer payment instrument. Period. According to the Fed's data, in 2015, cash remained the most frequently used retail payment instrument, used in nearly one-third (32 percent) of all transactions, including bill payments.

And research conducted on behalf of Cardtronics by Edelman Intelligence revealed that consumers widely use cash – and frequently – for all kinds of payments despite having access to a greater variety of digital payment methods.

Shopping (& Payments) Evolution

That said, with all of the myriad forms of payments today, it would be disingenuous to suggest “cash is king” in the manner it was in 1955. Today, in effect, the American consumer economy is on a journey to a new normal where cash continues to own a meaningful, if somewhat diminished percentage of transaction market share.

In the U.S., consumer shopping habits are changing, with the most significant change being the movement from the physical to the virtual storefront. For examples, look no further than Amazon or Starbucks’ mobile order & pay or how Uber effectively makes payment for a ride-sharing invisible and digital. These behaviors may well affect the use of cash in certain scenarios.

But there is a difference between evolving shopping preferences and the war on cash.

A Needless War on Cash

The war on cash has little to do with consumer preference. It is about a cashless society for the sake of those with a vested interest. Make no mistake, a cashless society is not without its downsides.

Simply consider security and privacy. As a Bloomberg View op-ed maintained earlier this year: “We need to be wary of this type of cashless future, especially at this point in history where security and privacy architecture around online payments is completely inadequate…you don’t have to be paranoid to worry about Big Brother tracking your financial life.”

Cash also gives us a back-up payment option when technical snafus confound the digital world. Merely ask the 132,000 RushCard customers locked out of their prepaid card accounts for several days last year by a technology glitch. Don’t forget mobile P2P service Venmo that suffered a service interruption right after the Super Bowl from what a spokesman claimed was “high volume.” Translation: It didn’t work because too many people wanted to use it at the same time.

Let the People Choose

We’re clearly not ready technologically for a cashless society. Even if we were, we must possess options and the freedom to choose. Consumers may choose to adopt a variety of payment methods, including cashless, but they should not be arbitrarily limited to it.

What matters most is CHOICE. A healthy payments community is diverse, not uniformly cashless. And it should always be defined by the freedom to choose the convenience, security, privacy and reliability that cash uniquely offers.